BIGGER TAX BURDEN LOOMING

Bargain hunters at Woodland Hills Camera & Telescopes moaned this spring when a 1 percent increase in the sales tax boosted the cost of binoculars, tripods and lenses.

Customers at the San Fernando Valley shop and other stores in the region will grumble even louder this week, when the sales tax in Los Angeles County rises an additional half-percent or a half-cent on the dollar.

Beginning Wednesday, the sales tax in Los Angeles County will reach 9.75 percent because of voter-approved Measure R, which is expected to generate $40 billion for local transportation projects over the next 30 years.

"People are already more sensitive to the price," said Scott Bloom, manager of Woodland Hills Camera. "This next half-percent increase will be the nail in the coffin to local merchants."

But supporters of Measure R note that the tax revenue will help alleviate traffic congestion through improvements expected to create as many as 212,000 jobs.

Voters had approved Measure R several months before Gov.Arnold Schwarzenegger imposed a 1 percent state sales tax - which began April 1 and will expire in 2011 - to help whittle down California's $24billion dollar deficit.

Measure R is expected to generate revenue to help build a $4.2 billion subway linking downtown to the Westside, an $800 million rail line linking Pasadena to Montclair and a $200 million extension of the Green Line rail to Los Angeles International Airport.

Jack Kyser, chief economist for the Los Angeles County Economic Development Corp., said the half-percent sales tax is a boon to the region despite concerns that the higher tax comes as consumers are coping with record-high unemployment and rising gas prices.

"You have a lot of things out there taking a toll on people, but over the long run this will be beneficial to us," Kyser said. "We are creating a nice mass-transit system."

But Bloom and other merchants fear the additional tax hike will drive penny-pinching families to shop online to avoid sales taxes or search for rock-bottom prices at mega-sized discount stores to save costs.

Woodland Hills Camera, for example, was forced to give some freebies to shoppers to cushion the blow of the 1 percent state sales tax hike that kicked in April 1 and is expected to generate nearly $6 billion toward the state deficit.

Jerry Nickelsburg, senior economist with the Anderson Forecast for the University of California, Los Angeles, said the additional sales tax will make consumers cut back on purchases.

"That's not a good thing when a large part of this recession is about consumers not buying," Nickelsburg said. "In order to bring consumers in, stores are going to have to absorb some of this increase by reducing prices a bit."

The additional half-percent sales tax means an extra penny for a $3.25 medium-sized Starbucks latte. It means an extra $7.50 for a $1,500 plasma TV with a 50-inch screen. It adds $96 to the price tag of a basic Mini Cooper car selling for $19,200.

Peter Kim, owner of C&C Aquatics, said customers in his fish shop stomped their feet at first when sales taxes jumped in April. It caused some to haggle the Sherman Way shop owner for cheaper prices.

"For shoppers, every little bit of money counts," Kim said.

Angel D'aorta, 21, of North Hollywood said shopping at discount stores helps him save money during these rough economic times. The half-percent sales tax will force him to be more tight-fisted.

"I already have to be careful with my money," D'aorta said. "It's a small increase. But little by little, it adds up to a lot of money."

Stuart Waldman, president of the Valley Industry and Commerce Association, said hundreds of jobs will be created by the transportation projects - a perk for the county where unemployment stands at 11 percent.

Just one year ago, the county's unemployment was 5.9 percent, according to the Kyser Center for Economic Research.

"It's going to pump money into the economy," Waldman said. "It will create jobs, and it will be beneficial."

Ned Escape, owner of the Knife Trader in Canoga Park, said the rise in sales tax will hit many middle-class consumers hard in the pocketbook. He's unsure of the affect it will have on his shoppers.

"Things aren't getting any cheaper," Escape said. "If you have three children, everything you are buying goes up by one-half cent. It's tough already."

Max Tayebi, 59, of Canoga Park, said the sales tax hike comes at a bad time for him, because his money is tight.